Margate’s Humbug Gobstopper

Humbugs-001

Heard the one about the Thanet landlord and his councillor wife?

They walked off with a public grant. Unfortunately this isn’t the start of a bad joke (“The grantender said: Oi! That’s public money!”) and even if it were, the laughs would be hollow because the taxpayer picked up the tab…

I blogged about Wade Barker and Judith Russell here.

It’s worth revisiting the gob-stopping story about the former sweet shop; a metaphor in microcosm for a world of public funds being abused, poor governance, landlords lapping at the public purse and property speculation.

(Consultants Deloitte estimate that there was £20.6 billion of fraud against the public sector and £22 billion of overdue debt owed to central government in 2013. Unfortunately, the closure of the National Fraud Authority means that an annual fraud figure is not available for 2014. This case is rotten fruit and small fruit and it is low-hanging fruit…)

Last month Thanet District Council agreed they had done all they could to get the £68,750 back and that they’d have to dip into their/our savings to pay back the Department for Communities and Local Government (DCLG).

Why? Wade Barker and his wife has used some of the money to buy the property and the rest had vanished into other bank accounts. None of it got used as the council had intended. Last month TDC said they’d implored the DCLG to hold fire and let them not repay the loan as it had helped regenerate the High Street, in a very indirect way…

I sent TDC a Freedom of Information Act request asking for a copy of their briefing note to the DCLG: This week I got it, in all its plaintive, snivelling glory. Here it is > Doc5315291 (1) It’s not really worth the paper it’s written on.

But the links to the council cabinet meeting minutes of 14 November 2013 in it are fruitful. Here’s what they reveal.

Due to a need to spend the ERDF funding to avoid a clawback from the Government Office of the South East (GOSE), it was agreed with GOSE that the grant to Melltree Properties would be paid up-front.

The Council’s view was that there was still a clear expectation that the grant had to be expended on the permissible purposes i.e. the conversion to a gallery and artist studios.

[BUT] Of the grant monies, a sum of £25k was used to repay property acquisition costs and a further £25k was paid to one of the director’s other companies. [Ed’s note: The rest?!]

… The Council’s legal team then actively pursued this debt and issued proceedings against the company. As Melltree Properties Limited were no longer trading and did not appear to have any assets to repay the debt, the company directors were also joined in the litigation in order that their personal liability could be established.

In turn, the directors argued that the Council had agreed that the grant could be used to defray property acquisition costs and that they could evidence that the full grant had been spent in accordance with the agreement.

An internal audit report on the grant claim (which had been disclosed to the defendants on the advice of counsel) included a statement from the Council’s Project Manager that the grant could in fact be used for property acquisition costs.

1: Melltree Properties appears to still be trading, with net assets of £891,500 and current assets of, coincidentally, £67,715 (almost exactly the grant money they took…)

I will today ask TDC for the evidence they were provided with showing it was no longer trading.

2: I will also ask for a copy of the statement from the council’s project manager saying they could, against all the odds, use the cash to buy the property.

Why did he say this and why has he not been held accountable?

There is so much more council waste and mismanagement at best higher up the tree (other terms could be used, but might be legally actionable…) The minutes of the same meeting show the council dipping into its internal balances to pay back liabilities of £2.7 million+, after KCC forward-funded construction of a road to a business park that never happened.

East Kent Opportunities was set up to incorporate KCC’s landholdings at Manston Park and Eurokent and TDC’s landholdings at Eurokent. KCC forward funded the spine road across the site on the understanding that this would ultimately be repaid by EKO. Repayment was originally due in 2010/11 but KCC agreed to reschedule this to 2013/14.

If the Council were to borrow externally to fund this repayment it would incur interest charges of £113k per annum, based on borrowing of £2.7m over 40 years at 4.2%. The better option was for Council to use its internal balances instead, TDC noted. More public money, on a road to nowhere, whilst the roads we use crumble and businesses struggle.

Imagine those millions had been used to reduce rates for local business owners…

 

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